Aggressive Construction Company Ltd v. Director of Buildings (in His Capacity As the Building Authority) and Another

HCMP 952/2025

[2025] HKCFI 2658

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 952 OF 2025

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BETWEEN

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REASONS FOR DECISION

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A.  INTRODUCTION

1.At the hearing yesterday, the Appellant applied for an interim-interim stay of execution pending the hearing of its summons dated 11th June 2025 (“the Stay Summons”). The Stay Summons seeks a stay of execution in relation to the 1^st Decision (as defined below), pending determination of paragraphs 1-3 of the Notice of Originating Motion dated 11 June 2025.

2.At the conclusion of the hearing, I granted the interim-interim stay, and gave directions for the further conduct of the Stay Summons and the Originating Motion.  I now set out the reasons for the grant of the interim-interim stay.

B.  BACKGROUND FACTS

3.The Appellant has been a registered general building contractor under the Buildings Ordinance (Cap.123)  (“the BO”)  since 2004.

4.On 3^rd March 2023, the Appellant applied to the Buildings Department (“the BD”)  to renew its status as a registered general building contractor, which was due to expire on 7^th April 2023 (“the Renewal Application”).  In the application:

4.1  the Authorised Signatories were identified as Chow Kai Pong, Law Chu Wah, Leung Hong Kit, Kan Ho Kai (“Mr Kan”)  and Ng Kwok Fai; and

4.2  the Technical Directors were identified as Fung Siu Hung Stanley (“Mr Fung”)  and Chow Kai Pong.

5.On 23^rd November 2023, the Appellant nominated Mr Kan as its Authorised Signatory to attend an interview with the Contractors Registration Committee (“the Committee”)  relating to a number of fatal incidents occurring at sites involving the Appellant, and suspensions of the Appellant; and Mr Wong Hang Fai (“Mr Wong”)  as its Technical Director to attend an interview with the Committee.

6.On 5^th December 2023, the BD requested an interview with Mr Wong on 19^th December 2023 and an interview with Mr Kan on 31^st January 2024.  The interview with Mr Wong went ahead as scheduled on 19^th December 2023.  The interview with Mr Kan did not, as the Appellant notified the BD that day that he was unable to do so due to a medical emergency.  On 2^nd February 2024, the BD requested Mr Kan to attend an interview with the Committee on 8^th February 2024.

7.On 6^th February 2024, the Appellant applied to add Mr Leung Chi Kin (“Mr Leung”)  as its proposed Technical Director and Authorised Signatory (“the TD/AS Application”).

8.On 8^th February 2024, the Appellant notified the BD that Mr Kan would be resigning, but that he would attend the interview to answer any questions raised by the Committee as he felt morally obliged to attend the interview to address any questions raised, even though he would not be representing the Appellant as its Authorised Signatory.  The BD says that it was not aware when exactly Mr Kan would resign.

9.On 14^th February 2024, the BD requested each of Mr Kan and Mr Fung to attend interviews with the Committee, both on 22^nd February 2024.  Both interviews went ahead.

10.On 1^st March 2024, the BD asked the Appellant’s further proposed Authorised Signatory, Mak Sidney Kim Leung (“Mr Mak”), to attend an interview with the Committee.

11.On 30th April 2024, Mr Kan ceased employment with the Appellant.

12.There are various cross-allegations as to who was responsible for delays in the scheduling and conduct of the interviews which I need not resolve.  By 11th April 2024, all interviews with the Appellant’s proposed Authorised Signatories and Technical Directors had concluded.

13.By a letter of 22^nd May 2025 (“the 22.05.2025 Letter”), the Building Authority (“the BA”):

13.1  refused the Renewal Application, and notified the Appellant that its name would be removed from the register of general building contractors on 20th June 2025 (“the 1^st Decision”); and

13.2  informed the Appellant that the TD/AS Application would not be processed since the Renewal Application was refused (“the 2^nd Decision”).

14.Paragraphs 2, 3 and 5 of the 22.05.2025 Letter read as follows.

“ 2. Regarding your renewal application, it was subsequently referred to the Contractors Registration Committee (CRC)  for consideration and advice, including the assessment of the abilities and competence of the following ASs and TD acting for you for the purposes of the Buildings Ordinance (BO)  to understand building works and street works through relevant experience and a general knowledge of the basic statutory requirements:

(i)  AS: Mr KAN Ho Kai

Mr MAK Sidney Kim Leung

(ii)  TD: Mr WONG Hang Fai

3. Taking into account the advice of CRC and in accordance with section 8C(5)(a)  of the BO, I regret to REFUSE your renewal application as you have not satisfied me that you are suitable for registration on the relevant register. Pursuant to Section 8C(6)(b)  of BO, I hereby notify you that I shall remove your name from the register of general building contractor on 20 June 2025.

…

5.  Regarding the addition application, since your application for renewal of registration is refused, this is also to inform that your application for addition of a TD cum AS submitted and received by this Department will not be processed.”

15.The Appellant appeals against the 1^st Decision under s.13A BO and the 2^nd Decision under s.9A BO, and seeks a stay of execution of the 1^st Decision pending appeal.

16.The Appellant applied for an interim stay of the 1^st Decision, pending substantive determination of its application for a stay pending appeal, as it will not be possible to hear and determine the Stay Summons and the Originating Motion before 20th June 2025.

C.  RELEVANT PRINCIPLES

C1.  Principles regarding the application for interim-interim relief

17.The starting point is that an appeal does not operate as a stay.  An applicant for a stay must show good reason for its grant.

18.It is not disputed that the court has power to order a stay of execution pending the Appellant’s appeal under RHC O.55: see O.55 r.3(3).  

19.The principles governing an application for a stay of execution of a judgment pending appeal were summarised in Fung Shing Chung v Choi King Hung [2024] HKCA 1021 at [20]:

“ (1)  The applicant is required to demonstrate a ‘good reason’ for a stay of execution.

(2)  Generally speaking, the existence of merely an arguable appeal cannot by itself amount to a sufficient reason to justify a stay. It is the minimum requirement before a court would even begin to consider granting a stay.

(3)  In other words, if the Court is not convinced that there exist arguable grounds of appeal, no stay will be granted however exceptional the circumstances may otherwise be justifying a stay of execution.

(4)  On the other hand, the existence of a strong appeal or a strong likelihood of success will usually by itself enable a stay to be granted because this would constitute a good reason for a stay.

(5)  In most cases, where the Court is faced with simply the existence of an arguable appeal, it becomes necessary for the applicant to provide additional reasons as to why a stay is justified.

(6)  Commonly, this is done by demonstrating that without a stay the appeal would be rendered nugatory, for example, because of an appreciable risk that the respondent to the appeal would not be able to repay in the event of a successful appeal against a money judgment, or because the failure to grant a stay would have a serious deleterious effect on the applicant.

(7)  In considering an application for a stay pending appeal, it would be impractical and even undesirable for the Court to go deeply into the merits or strengths of the appeal, although the Court must still form a preliminary view of these aspects, see: Star Play Development Ltd v Bess Fashion Management Co Ltd [2007] 5 HKC 84 per Ma J (as he then was)  at [9]-[10].

(8)  While the existence of a strong appeal would tend to lead the Court to exercise its discretion in favour of granting a stay, the threshold is a high one.  The Court has held that for there to be a ‘strong appeal’ such as would justify the grant of a stay without more, the situation must be one which would lead the Court to conclude that something has grievously gone wrong with the process of law in the Court below, or that the appellant is ‘almost bound to succeed’.  Absent such a case, something more needs to be demonstrated: John Joseph Mc Gee v. Nold (HK)  Ltd [2024] HKCA 354 per Barma JA at [30].”

20.Interim-interim relief is meant to be an urgent temporary stop-gap measure, in circumstances such that the court has to do practical justice on the balance of fairness even though it may not have sufficient time or a fair opportunity to consider an application for interlocutory relief fully.  The Court conducts a multi-faceted assessment; factors that may be taken into account include the merits, the effect of the grant or refusal of the relief, and the subject matter at stake.  The Court will take whichever course appears to carry the lower risk of injustice if it should turn out to be wrong.  See China Shanshui Cement Group Ltd v Zhang Caikui & others [2018] HKCA 409 at [13] to [19] (Lam VP, as he then was).

C2.  Principles regarding an appeal under s.13A BO

21.In hearing an appeal under s.13A BO, the court may confirm, reverse or vary the decision of the BA. The court has a broad power; it is not confined to consideration of points of law alone; it may consider the merits of the case on appeal. See Tsang Tak Wai v Building Authority (No.2) [2019] 1 HKLRD 801 at [39]. On the other hand, although the appeal is conducted by way of a rehearing, it is not a retrial. The court’s role will be to look into the original decision to see if there are mistakes such that the appellate court should intervene. In the exercise of discretion, different judges, tribunals and boards may reasonably have different views, but it does not mean that the appellate court can replace the original views of the original tribunal with its own views. On the contrary, the appellate court must give proper weight to an earlier decision. An appellant must be able to point out that the tribunal erred on a point of law, departed from an applicable principle, misapprehended the facts, took into account irrelevant matters, or exercised its discretion without any reasonable basis whatsoever before the appellate court would intervene. See WKP v Chiu Chung Yee Charles [2018] 3 HKLRD 232 at [21] (Lam VP, as he then was).

D.  APPLICATION OF THE PRINCIPLES

D1.  Merits of the appeal

22.Mr Benjamin Yu SC, appearing with Mr Thomas Wong for the Appellant, submitted that the Appellant has strong grounds of appeal. In his written submissions, Mr Anthony Chan SC, appearing with Mr Justin Lam for the Respondents, had submitted that the appeal was unarguable, but at the hearing Mr Chan quite realistically and fairly accepted that the grounds of appeal were at least arguable. As much of the focus at the hearing was on the merits of the appeal, I deal with this first.  In a nutshell, it seemed to me that – at this stage at any rate – there has been no real answer to the points which have been put forward by the Appellant. Of course, my views at this stage are necessarily preliminary, being based on a brief review of the evidence filed thus far, and the arguments mounted, in the limited time allowed, and will be subject to reconsideration when further evidence has been filed, and the Stay Summons is fully argued.

23.Under s.8E BO, the BA is required to give written reasons for a decision not to include, retain or restore a contractor’s name in a register, at the time of giving notice of the refusal.

24.The requirement to give reasons is based on fairness, so that the person adversely affected by a decision should have an adequate indication of the reasoning process, enabling him to know whether the decision-maker has addressed his grievance and whether there may be a basis for challenging the decision: Capital Rich Development Ltd v Town Planning Board [2007] 2 HKLRD 155 at [97].

25.The reasons given should show that the decision-maker has addressed the substantial issues before it and show why it has come to its decision.  There may not be any need to address every single issue.  But the reasons should show that the issues that arise for serious consideration have been considered: Oriental Daily Publisher Ltd v Commissioner for Television and Entertainment Licensing Authority (1997-1998)  1 HKCFAR 279 at 291D.

26.In the present case, it is said that the BA failed to give adequate reasons as required by s.8E BO, in that it merely asserted the conclusion – that the Appellant had not satisfied the BA that it was suitable for registration on the relevant register – but did not explain why the BA came to this conclusion.

27.Insofar as the BA’s reasoning process can be deduced, it would appear that:

27.1  one factor that the BA took into account was the ability and competence of Mr Kan, but the Appellant had already informed the BD on 8^th February 2024 that Mr Kan would be resigning from the Appellant and would not be its Authorised Signatory.  The Appellant therefore says that the BA proceeded on a misunderstanding of the facts, or took into account irrelevant considerations;

27.2  one factor that the BA did not take into account was the ability and competence of Mr Fung, which was presumably a matter that the Committee considered relevant since it asked to interview him.  The 22.05.2025 Letter mentioned only Mr Wong as the Appellant’s proposed Technical Director, not Mr Fung.  The Appellant therefore says that the BA omitted to take into account a relevant matter;

27.3  according to what was said during the press conference held by the Secretary for Development and the Director of Buildings on 22^nd May 2025, the BA adopted a policy whereby any application for the addition of a Technical Director or Authorised Signatory submitted whilst a renewal application was pending, and after the expiry of the applicant’s registration, would not be considered.  However, the Appellant says that it cannot find any such published policy in either the BO or the Practice Note for Registered Contractors 38, and insofar as there is such a blanket policy, it is irrational, as there could be many (legitimate)  reasons why an applicant for renewal of registration might want to add to or change its list of Technical Directors or Authorised Signatories.  The Appellant therefore says that the BA proceeded on an irrational basis in not processing the TD/AS Application.

28.Mr Chan advanced a number of arguments to meet these points.

29.First, Mr Chan submitted that s.8C BO enables the BA to refuse an application for registration for subjective reasons.  In particular, he submitted that “so long as [the Respondents] were subjectively satisfied on proper grounds, it is not the Court’s role to assess whether the Appellant is objectively suitable for registration on the relevant register”.[1]  Assuming in the Respondents’ favour (without deciding)  that this is so, this still requires there to be “proper grounds” for the 1^st Decision. This would therefore not answer the point that those grounds have not been identified or, insofar as they can be deduced from the 22.05.2025 Letter, proceed on mistaken facts, or omit relevant facts, and were therefore not “proper”.

30.Second, Mr Chan submitted that s.8C(5)(a)  BO enables the BA to refuse an application for renewal “for any reason”.  He submitted that the statute does not define this phrase, and it should not be construed as limited to the criteria of assessing whether registration should be granted to a new applicant.  Assuming in the Respondents’ favour (without deciding)  that that is the case, the phrase would not extend to reasons which are unacceptable on public law grounds: as Mr Chan accepted, whilst the BA had a wide discretion under s.8C, he would be subject to the usual public law restraints in the exercise of this discretion.  Again, therefore, this would not answer the point that the reasons for the 1^st Decision are unidentified, proceed on a mistake of fact, or omit relevant facts.  What is notable in the present case – at least as matters currently appear – is that in seeking to justify the 1^st Decision, Mr Chan has had to rely on reasons which are not stated in the 22.05.2025 Letter, and instead has directed my attention to matters such as the press release made on the day of the letter, or matters said to be generally known to the public.  However, these were not the reasons given to the Appellant, so that the Appellant would have difficulty in framing a challenge to the 1^st Decision.

31.Third, Mr Chan submitted that on any view, the BA was entitled to be satisfied that the Appellant was no longer suitable for registration in view of the fact that a total of five workers had died on the construction sites of the Appellant in the short span of three years.  That may be so, but again, this is not what the 22.05.2025 Letter gave as the reason for the 1^st Decision.  In any event, as was pointed out by Mr Yu, it does not necessarily follow from the fact that they were fatalities that the Appellant was not suitable for registration; one would first need to consider the reason for the fatalities.

32.Fourth, Mr Chan submitted that taking into account the recurring history of fatal accidents at the Appellant’s construction sites, it was self-explanatory as to why the BA considered that the named personnel did not have the requisite expertise to allow the Appellant to remain on the register.  However, the Appellant had told the BA back in February 2024 that one of these named personnel – namely Mr Kan – would no longer be representing the Appellant; yet he was named in the 22.05.2025 Letter as acting for the Appellant.  As for the other two – Mr Mak and Mr Wong – the BA had in 2023, on the advice of the Committee, given approval to Mr Mak and Mr Wong to act as the Authorised Signatory and Technical Director of the Appellant.

33.Conversely, the expertise of one of the personnel which the Appellant had put forward and which the Committee had interviewed – namely Mr Fung, appears not to have been considered.  Mr Chan’s answer was that Mr Fung was put forward as a Technical Director, but since both Authorised Signatories had failed their interviews, that would be a sufficient ground for refusal of the Appellant’s application already.  Again, however, this is not what was stated in the 22.05.2025 Letter.

34.Fifth, Mr Chan submitted that reasons for a decision may be brief, particularly in the current context, where a registration may be “for any reason” not be renewed; the fact that the Respondents did not record in the letter the entirety of the reasoning process cannot be taken to mean that they misapprehended the facts or took into account irrelevant considerations.  However, in the present case, the Appellant’s criticism is not that the reasons for the 1^st Decision were brief, but that they were not stated at all (and merely stating that the Committee’s advice had been taken into account was not a reason either); and insofar as the reasons could be deduced, they disclosed mistakes of law.

35.Sixth, in relation to the 2^nd Decision, Mr Chan submitted that whilst at present there was no evidence to deal with the matter, the Respondents will be saying that (1)  whether Mr Leung, the proposed replacement candidate for Technical Director and Authorised Signatory, was interviewed, was entirely a matter for the BD’s discretion, and (2)  the fact that the three persons named in the 22.05.2025 Letter had failed their interviews showed that the Appellant lacked judgment and ability. Leaving aside the absence of evidence, this appears to be at odds with the statement regarding the blanket policy given on 22^nd May 2025.

36.Seventh, Mr Chan submitted that even if the matter were to be remitted to the Respondents for reconsideration, the outcome “would in all likelihood” be the same.  However, I cannot summarily say at this stage that, if (for example)  the Appellant were able to show that relevant matters had not been taken into account and that all relevant matters were taken into account, it is inevitable that a reconsideration of its application would nevertheless result in the same outcome.

37.I emphasise once again that all of these observations are preliminary and must be revisited at the substantive hearing of the Stay Summons with the benefit of fuller evidence and argument.  But at this stage, it seems to me that the Appellant’s appeal is much more than merely arguable.

D2.   Whether appeal would be rendered nugatory

38.I accept the submission of Mr Yu that without an interim-interim stay, the Appellant’s appeal would be rendered nugatory.  If its status as registered general building contractor were to be terminated on 20th June 2025, it would have to cease its work on its existing uncompleted projects.  There are six of these, at various stages of completion.  A number of consequences would follow on from the cessation.

38.1  The Appellant would be cut off from its income and cash flow from the projects.  Mr Yu submitted that the bulk of payment for a construction project is typically made towards the end of the project, so that the Appellant would be unable to receive much of the payment for the uncompleted projects.

38.2  At the same time, the Appellant would face either calls for payment of sums accelerated by the loss of its status, or liabilities caused by the loss of its status.

38.2.1  The Appellant’s contracts with employers for the projects would be terminated, exposing it to claims of breach of contract.  Indeed by a letter of 22^nd May 2025, the Hong Kong Housing Authority gave advance written notice to the Appellant that because the Appellant would no longer be a registered general building contractor from 20th June 2025, the Appellant would be in breach of contract and be liable for damages therefor.

38.2.2  The Appellant would be in breach of bonds obtained from various banks as guarantees to the Appellant’s employers for due performance of its contractual obligations, and would be liable to indemnify third-party sureties in respect of payouts made under the bonds.

38.2.3  There has been delay at various stages of the projects, for which the Appellant would be liable to pay liquidated damages, amounting to some $336m as at 20th June 2025. As Mr Chan rightly points out, the incidence of this liability cannot be laid at the door of the Respondents.  However, the termination of the Appellant’s status as registered general building contractor would, according to the evidence of the Appellant, essentially accumulate and accelerate the liability as at 20th June 2025, making the amounts all payable together at a time when the Appellant would no longer have any cash flow or sufficient assets to meet the claims.

38.2.4  The Appellant is currently liable and would remain liable to pay its subcontractors and suppliers for work done and materials supplied in respect of the projects, in the amount of some $206m.

38.2.5  Given that the Appellant currently has cash of around $154m, it would likely face the prospect of being wound up.

38.2.6  The Appellant’s reputation, goodwill and standing in the construction industry – such as it is – would be harmed by the abrupt cessation of its registration and the disruption caused to its 593 employees.

39.Mr Chan submitted that the Appellant had financial difficulties even before the 1^st Decision, so that it may be wound up even if a stay is granted.  However, on the basis of the existing evidence, it seems that such a risk would be greatly amplified if no stay were to be granted. Mr Chan further argued that if any contractor could rely on cashflow difficulties to seek a stay of execution, then all contractors would be able to obtain such a stay. However, whether or not any other contractor in a different case who experiences cashflow difficulties would be able to obtain a stay of execution would depend very much on all the circumstances of that particular case.

40.Mr Chan further submitted that the Appellant has failed to adduce any evidence to show that it has no other income stream that could be relied on to sustain itself pending appeal.  Mr Yu pointed out that the Appellant’s business is construction; termination of its registration must inevitably mean the termination of its “lifeblood”, at a critical stage of completion of the projects on hand. At this interim-interim stage, I was not prepared to say otherwise. Mr Yu further pointed out that the prejudice would be irremediable as the Appellant would be at risk of being wound up and it would not be able to pursue the BA for damages even if it succeeded in its appeal.  

41.Mr Chan submitted that there was no merit in the Appellant’s complaint about harm to reputation and goodwill as such harm was the product of the Appellant’s own “shockingly poor track record”.  It seems that these are two different matters.  What Mr Yu was saying is that the Appellant’s reputation as an employer will be adversely affected as it will no longer be able to pay its employees.  This is different to the Appellant’s reputation based on the incidents which have occurred at its construction sites.

D3.  Prejudice to the Respondents

42.Mr Chan submitted that the grant of interim-interim relief would be detrimental to public safety and contrary to the public interest.  He said that it would be wrong to allow the Appellant to continue carrying out work as a registered contractor pending its appeal, putting life and limb at risk, and requiring the BD and employers to devote extra resources to police the Appellant’s projects to protect public safety.

43.One must hesitate before giving an order which might have wider implications for public safety.  On the other hand, I bore in mind the following.  The fatal incidents relied on by the Respondents as demonstrating the Appellant’s unfitness happened between 2020 and 2023.  The labour safety-related conviction records relied on by the Respondents also took place between 2020 and 2023.  (There was a further incident in April 2024 involving the toppling of a piling rig, but as Mr Yu pointed out, the newspaper report relied on by the Respondents shows that this was an incident which occurred in the course of a routine inspection, and that upon discovery of an abnormality the machine was immediately shut down; he submitted that if anything, this showed that Appellant was taking safety concerns seriously, rather than being negligent.)   The Appellant’s registration would in the normal course have expired back in April 2023.  Leaving aside the parties’ cross-accusations of delay in the earlier part of the application for renewal, the BD’s interviews relating to the renewal had concluded by April 2024.  Yet the 1^st Decision was not made until 22^nd May 2025.  In the circumstances, I was not persuaded that the relatively short period which an interim-interim stay would involve was sufficient to displace the other considerations.

D4.  Conclusion

44.Taking all of the above into consideration, it seemed to me that the course which carries the lower risk of injustice to the parties, if it should turn out to be wrong, was to grant an interim-interim stay, pending a full hearing and determination of the Stay Summons.

45.It should go without saying that the grant of the interim-interim stay should not be construed as a comment on the performance or track record of the Appellant.

Mr Benjamin Yu SC leading Mr Thomas Wong, instructed by DLA Piper Hong Kong, for the Appellant

Mr Anthony Chan SC leading Mr Justin Lam, instructed by Department of Justice, for the 1^st and 2^nd Respondents